Investors bullish as jab rollout looms
Aid packages improve outlook
The Investor Confidence Index (ICI) for the next three months remained bullish in March thanks to optimism surrounding Covid-19 vaccine rollouts, the prospect of fund inflows and listed companies' earnings growth.
However, the pandemic persists in many countries, tarnishing investor confidence, followed by uncertainty regarding the future of tourism and flaring local political conflicts.
Paiboon Nalinthrangkurn, chairman of the Federation of Thai Capital Market Organizations (Fetco), the sponsor of the index, said the most attractive sectors are food and beverage, tourism and leisure, and petrochemicals and chemicals.
The SET index rose by 6% in March and around 9.5% year-to-date, thanks to several positive catalysts including the Bank of Thailand's and the Finance Ministry's additional relief packages worth 350 billion baht to aid businesses affected by Covid-19.
The government's decision to ease restrictions on both domestic and international travel are also factors supporting positive market sentiment, he said.
External factors to monitor include the US $1.9 trillion (59.4 trillion baht) infrastructure and economic recovery package because it may affect investor anticipation of inflation, which is reflected in the rise of bond yields in the US and several countries worldwide.
Investors should also watch the trade and technology dispute between the US and China, as well as the violence in Myanmar, said Mr Paiboon.
The Investment Analysts Association (IAA) upgraded its 2021 year-end SET Index target to 1,629 points from 1,559 points in January as results from its survey of market analysts and fund managers' investment views reflect improved sentiment. Respondents were not as concerned about the pandemic and political unrest.
IAA secretary-general Sombat Narawutthichai said 23 companies that responded expect average GDP growth of 3.08% in 2021, with average global crude oil prices of $58.39 per barrel.
The earnings per share of listed firms are expected to rise by 57%, recovering in line with the global and Thai economies.
The SET Index is projected to move in a range of 1,479 to 1,671 points, with the year-end estimate at 1,629 points or up 70 points from the previous year, said Mr Sombat.
IAA recommends investors diversify their portfolios and allocate 12.5% to cash, 11.9% to fixed income funds, 31.4% to stocks or equity funds, 29% to global equity or foreign investment funds, 10.3% to real estate investment trusts, and 4.9% to gold.
Stocks to avoid include those related to electronic components, which have already risen more than 1,000% in the previous year, and some credit card stocks that were significantly overpriced.
IAA also recommends the government speed up policies to improve economic conditions such as cutting income tax, accelerating vaccine distribution, increasing public investment and providing help to business.
For the local bourse, IAA suggests accumulative buying of Bangkok Bank (BBL), Bangkok Dusit Medical Services (BDMS), CP ALL (CPALL), Kasikornbank (KBANK), PTT (PTT), and PTT Global Chemical (PTTGC).